October 5, 2012
Australia's status as a safe haven has attracted a surge in investment from Indian investors.
A growing number of Australian hotels and mines have been quietly acquired by investors from India, as Australia's reputation as a safe haven draws India's wealthy. This coincides with the Australian government's efforts to promote and attract long-term investment.
The Forbes-ranked Jindal family bought two minor stakes in Australian iron ore and coal mines, investing AUD 26 million in May this year.
This was following a USD 2 billion buyout of a coal mine in Queensland by Indian self-made billionaire Gautam Adani.
Silverneedle Hospitality expanded its Australian hotel portfolio with the recent acquisition of a hotel in Brisbane for AUD 57 million. Least year, the company acquired a total of 60 hotels in Australia and New Zealand.
"In the last six to nine months, there has been a lot of private investment in Australia because it is seen as a safe haven," said Paul Dowling, principal analyst at banking research firm East & Partners.
Indian nationals are turning away from traditional favourites Britain and North America for offshore investments, with private wealth bankers noticing a growing demand for real estate Down Under - particularly hotels and serviced apartments.
Paul Guest, head of research and strategy at Singapore-based LaSalle Investment Management, said this should be no surprise, as Australian properties are very attractively priced. In addition, total returns in Australia are pegged at 10% per annum - the highest in Asia, topping even Japan and South Korea's 9%.
Another attractive factor is Australia's relatively sound economic performance in comparison with its Western peers. It is one of only eight nations today that still carries a pristine AAA rating with a stable outlook.
Having dodged a recession after 2008's global financial crisis, Australia is now in its 21st year of uninterrupted annual growth. Ranked in the 52nd position in terms of population, Australia will overtake Spain as the world's 12th largest economy this year.
Foreign direct investment leapt to AUD 67 billion in 2012, nearly double the amount in the previous year, according to government statistics. In as little as five years' time, Indian investors could have pumped as much as AUD 30 billion into the country, said analysts.
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